US charges Turkey's Halkbank with evading Iran sanctions

The US Department of Justice said it had charged Turkey's Halkbank with six counts of fraud, money laundering, and sanctions offenses (AFP Photo/OZAN KOSE)

New York (AFP) - US federal prosecutors filed criminal charges against Turkey's state-run Halkbank Tuesday for allegedly participating in a multi-billion-dollar scheme to evade economic sanctions on Iran.

The Department of Justice said it had charged the bank with six counts of fraud, money laundering, and sanctions offenses.

"This is one of the most serious Iran sanctions violations we have seen," Assistant Attorney General John Demers said in a statement announcing the indictment.

He added Halkbank had allegedly violated sanctions by "illegally giving Iran access to billions of dollars' worth of funds, all while deceiving US regulators about the scheme."

The indictment comes at an extremely sensitive time between Washington and Ankara after the US slapped sanctions on Turkey on Monday over its military offensive against Kurdish fighters in northeastern Syria.

US prosecutors have charged nine individuals in relation to the case, including Mehmet Hakan Atilla, a deputy director general of the bank, who was convicted last year of plotting to help Tehran evade American sanctions on Iranian oil proceeds.

Atilla was found guilty in January 2018 following a five-week trial in New York. He was released from prison in July this year.

Atilla's conviction hinged on the testimony of Turkish-Iranian gold trader Reza Zarrab, who was arrested by US authorities in 2016 after jetting to Florida with his pop-star wife and child on a family holiday to Disney World.

Zarrab initially pleaded not guilty then flipped, becoming a US government witness after admitting being involved in the gold-for-oil scheme to subvert the economic sanctions.

His testimony identified Atilla as a key organizer in the scheme, but also implicated former Turkish ministers and even President Recep Tayyip Erdogan.

Erdogan has repeatedly rejected the allegations, saying Turkey did not violate the US embargo on Iran and that political rivals were behind the case.

The case has been a regular subject of discussion between Washington and Ankara.

Tuesday's indictment, filed in a Manhattan court, alleges that between 2012 and 2016 the Turkish bank and co-conspirators used front companies in Iran, Turkey, the United Arab Emirates and elsewhere to get round a ban on Iran's access to the US financial system.

They say Halkbank allowed illegal Iranian money to be deposited with it, including the proceeds of sales of Iranian oil and gas. Iran's government then used the money to buy gold.

Halkbank illicitly transferred approximately $20 billion worth of restricted Iranian funds, prosecutors allege.

They claim that high-ranking officials in Turkey's government received bribes worth tens of millions of dollars paid from the proceeds of the scheme to shield it from US regulators.

It was not immediately clear what the consequences of the indictment are for the bank.